Now that FatBurger is planning to set up shop at the Kwik Way location, questions I get asked a lot are: What’s next? How much say does the City or the community itself have in whether and how this plan goes forward?

City staff performed a detailed analysis of the Kwik Way site in a similar context just three years ago. This report provides some strong suggestions about the level of scrutiny the FatBurger plan should face.

Based on that analysis, and what we know about the FatBurger plan—and as long as the City stands behind and remains consistent with its past analysis—it seems highly likely that FatBurger will face a high level of review and public input, including a full-blown hearing before the Planning Commission—as long as the City rigorously enforces its own Municipal Code.

When McDonald’s attempted to move into the Kwik Way

About three years ago, McDonald’s wanted to take over the Kwik Way’s building, change the signage to golden arches, make some upgrades, and start selling Big Macs on Lake Park Avenue.

McDonald’s thought that, since Kwik Way was already serving fast food, they could just fill out a few forms, get some building permits, and set up shop.

McDonald’s learned that it wasn’t that easy: After a little prodding from the community, the City ruled that the Municipal Code required that McDonald’s would first need to apply for, and be granted, a “major conditional use permit,” because fast-food restaurants and drive-thrus are not compatible with the site’s C-30 zoning.

“Major conditional use permit (CUP)” sounds a bit wonky, but the bottom line is that the requirement to get one meant that McDonald’s needed to go through a process that would be much more involved and have a higher level of scrutiny, both from City staff as well as from the public—e.g., it requires a hearing before the Planning Commission.

Perhaps one measure of how big an obstacle this major-CUP requirement was is this: Once the City ruled that McDonald’s needed to get one, we never heard another word from McDonald’s about moving into the Kwik Way location.

Grandfathered Kwik Way

So if it’s so hard to get a fast-food restaurant approved given Lake Park Avenue’s zoning, how did the Kwik Way accomplish this in the first place?

It didn’t have to. The Kwik Way was built around 1955 and converted to a drive-thru around 1982. This was before the City adopted its rules regulating fast-food restaurants and drive-thrus.

The Kwik Way was automatically grandfathered in or, as the more-legalistic language goes: the Kwik Way is a legal nonconforming business. This gives the Kwik Way a limited right to keep doing what it’s doing, even though what it’s doing is at odds with current zoning.

What are the limitations on this right? According to § 17.114.040 of Oakland’s Municipal Code, a nonconforming use in existence when the zoning regulations went into effect—such as the Kwik Way’s fast-food/drive-thru use:

…may thereafter be continued and maintained indefinitely, and the rights to such use shall run with the land, except as otherwise specified in the nonconforming use regulations.…

but, then, the kicker:

However, no substitution, extension, or other change in activities and no alteration or other change in facilities is permitted except as otherwise provided in Section 17.114.030 and except as specifically provided hereinafter.

If a nonconforming business wanted to make such “substitution, extension, or other change in activities [or] …alteration or other change in facilities,” it would lose its legal-nonconforming status. It would then have to apply for a major conditional use permit, just as if it was starting its nonconforming business from scratch. In other words, it would be de-grandfathered.

Just this provision alone tells a strong story about how the Municipal Code views older businesses that are incompatible with current zoning: You have a right to try to survive, but not to grow or thrive. Grandfathering is meant to prevent extreme hardship due to a change in law. It isn’t a free pass to pursue your incompatible activity to your heart’s content.

Planned improvements to building would have de-grandfathered McDonald’s

Although the City’s analysis found multiple reasons why the McDonald’s plan would have caused the Kwik Way site to lose its status as a legal nonconforming use, I’m going to focus on only one of them, because it’s the most clearly applicable to our current situation with Fatburger.

What I quoted above from the Municipal Code says that, in order to retain legal-nonconforming-use status, you can’t make any alteration or other change in facilities “except as specifically provided hereinafter.”

Here’s one of those hereinafters, from § 17.114.080:

During any five-year period… the aggregate cost of all alterations for which a building or sign permit is required… shall not exceed twenty-five (25) percent of the replacement cost, as estimated by the Inspectional Services Department, of the facilities….

The City found that McDonald’s was planning:

… an upgraded facility, including a new 1,500 gallon underground grease interceptor; approximately 160 new pieces of kitchen equipment; electrical, plumbing, and gas line upgrades; drive-through communication and signage upgrades; and other changes.

The City estimated the cost of all these upgrades to be $80,000.

The City also estimated the replacement cost for “constructing a new restaurant of comparable size to the existing” would be $180,780, based on “Marshall and Swift valuation charts (2001), a standard source the City uses to evaluate the value of the buildings.”

The cost of the upgrades ($80,000) was over 44 percent of the replacement cost ($180,780)—well over the 25-percent maximum.

The City determined that this large cost of upgrades, relative to the replacement cost, is “a separate and independent basis” for finding that the Kwik Way would lose its grandfathered status and, thus, that McDonald’s would need to apply for a major CUP.

[As I said above, and as many of you will remember, there were other bases as well for requiring a major CUP. One was City staff’s concern about traffic from the drive-thru business, particularly since the McDonald’s would be expanding their hours of operation into the morning. (Kwik Way isn’t open for breakfast, so this was clearly an “expansion” in the language of the Municipal Code.) I don’t focus on this here, because FatBurger is not planning to open for breakfast.]

Implications for the FatBurger plan

What does this three-year-old analysis of McDonald’s tell us about whether FatBurger would be required to get a major conditional use permit and to face the high level of City and community scrutiny that would imply?

The City’s calculation of the replacement cost of the current building is clearly still relevant. It would just have to be updated for inflation.

FatBurger’s planned improvements aren’t, of course, identical to what McDonald’s proposed. So City staff would have to do a new calculation of the cost of the upgrades based upon the specific work for which FatBurger will seek permits.

I would guess, however, that FatBurger’s planned alterations would be at least as significant as what McDonald’s contemplated, if only because FatBurger would create significant indoor seating, which McDonald’s plan did not include.

While inflation will increase the replacement cost compared to the three-years-ago estimate, it will also increase the cost of improvements. There’s no reason to expect that inflation would change the fraction of replacement cost represented by a given set of improvements.

FatBurger likely to need a major CUP

Here’s the bottom line of this analysis: There’s every reason to expect that the cost of FatBurger’s planned improvements will exceed the 25-percent threshold of replacement costs.

Therefore, as long as the City rigorously enforces its own Municipal Code, FatBurger would lose its status as a legal nonconforming use and would consequently be required to apply for and receive a major conditional use permit.

This major-CUP process would provide extensive opportunities for the City to assess the merits of the project and its conformity (or lack thereof) with the General Plan and for the community itself to weigh in on this question.

Now… let’s see whether the City does indeed continue to enforce the Municipal Code at this site. I, for one, will be watching.…